State agency fast tracks permits for fracking, raising concerns

Enlarge ImageRequest to buy this photoEric Albrecht | DISPATCHConstruction workers install a pipe at the Kensington gas-processing plant in Columbiana County. The plant, located on 170?acres, joins others going up in eastern Ohio.

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NEW MIDDLETOWN, Ohio — The shale-gas company wanted a pollution permit in less than four
months.

To help it meet that goal, Ohio Environmental Protection Agency officials had to do two things:
avoid a public hearing and make sure the feds didn’t get involved.

After NiSource officials applied for a permit last February, they told the Ohio EPA that they
needed it by June 1 so they could build a shale-gas refinery in Mahoning County by December.

They got the permit on June 5 and completed building their Hickory Bend refinery on Dec. 31.

Then-Ohio EPA Director Scott Nally lauded his staff for quickly approving that permit and at
least six others last year.

“This is brand new for Ohio. This is a game-changer,” Nally said last year while touring a
new plant in Columbiana County. “Obviously, everybody wanted it yesterday.”

Not everybody.

“They just come into a community and cram these things down their throats and then wonder why
people are upset,” said Patti Gorcheff, a Beaver Township resident and member of an advocacy group
called Frack-Free Mahoning.

Environmental-advocacy groups and residents of communities throughout eastern Ohio say the EPA
has ignored their concerns about air and water pollution from the refineries and the fracking
process that frees the gas.

The law allows for such projects, considered minor air-pollution sources, to move relatively
quickly and without public hearings. However, some in the community wanted a chance to weigh
in.

Demands for a public hearing in Mahoning County were rejected by officials who feared it would
slow down the permit process, in part because holding a hearing triggers a requirement that the
agency go back and evaluate and respond to public concerns.

So instead of a hearing, the EPA held an informational meeting for residents, who said their
concerns were not addressed.

“This whole shale play has all been a boom for the industry and a bust for concerned citizens,”
said Jack Shaner, a lobbyist with the Ohio Environmental Council. “Ohio has bent over backward to
accommodate this industry and run roughshod over citizen rights to know and comment on the impact
to their air and water quality.”

Chad Zamarin, NiSource Midstream’s chief operating officer, said the plant is safe and will
provide a welcome economic boost to the region.

“We’re buying local material, we’re supporting local businesses and participating in the
community,” Zamarin said.

Ohio EPA officials say they are taking the necessary steps to protect people and air
quality.

“If it goes through our process, we don’t think there is going to be any type of health issue
associated with it,” said Mike Hopkins, the Ohio EPA’s assistant chief of air permitting.

The permitting process for Hickory Bend, a minor polluter, moved quickly compared with plants
that are considered major pollution sources, which undergo much more scrutiny. The latter take
months, or even years, longer because of public-comment opportunities and federal oversight.

State officials have said that Hickory Bend and other eastern Ohio refineries likely will become
major sources of air pollution as they expand to take on more natural gas and that residents will
have a chance to comment then. But residents and environmentalists worry that it will come too
late.

State officials say they are committed to working with energy companies to increase shale
drilling in Ohio. Gov. John Kasich predicted in 2010 that drilling would be a “godsend” for the
state’s economy.

Shale drilling added the Buckeye State to a national energy revolution in which companies are
tapping domestic sources of oil and gas. It also involved the public in an ongoing debate focused
largely on the environmental and health effects of fracking and the waste that comes out of shale
wells.

Since 2010, more than 660 wells have been drilled in Ohio, paving the way for pipelines,
disposal wells for fracking waste and refineries.

The Utica’s rich supply of gas and oil is tapped by horizontal drilling, a technique that sends
drill bits thousands of feet underground and then turns them 90 degrees to carve mile-long shafts
through the shale.

Then comes fracking — pumping millions of gallons of water, sand and chemicals below ground to
shatter the shale and free the oil and gas.

The raw product that streams from the shale wells is a mixture of natural gas and the liquids
propane, butane and ethane. A cryogenic processing plant uses pressure and temperature to separate
the liquids and natural gas. Once refined, the natural gas is shipped via pipeline to utilities
that serve businesses and homes.

NiSource’s Hickory Bend processing plant, built for $375 million on 95 acres near the
Pennsylvania border, has a 200-foot-high tower and a separate torch-like flare that can burn day
and night. When fully operating, the plant is expected to refine enough natural gas in one day to
fuel nearly 2,800 homes for a year. And that’s before any expansion.

A second type of processing plant, called a fractionator, separates the propane, butane and
ethane and sends them to market via pipelines, trucks or trains. Propane and butane are sold as
fuels. Ethane is refined into an ingredient used in many plastics.

Industry officials say that, because there are more wells than processing plants, the demand for
processing is keeping the gas capped at many Utica shale wells. An Ohio Department of Natural
Resources database lists 251 shale wells — about 38 percent — as producing oil and gas.

Gas-processing companies “are now in a race to keep ahead of the drilling activity and put the
(processing) in place,” said Tom Stewart, vice president of the Ohio Oil and Gas Association.

Bob Orr, a Springfield Township trustee, said Hickory Bend is the long-awaited start of an
economic turnaround for an area that never recovered from massive layoffs of steelworkers in the
1980s.

“We’ve been hard-pressed for jobs here for a long time,” said Orr, whose township surrounds New
Middletown. “We’ve had over 200 contractors a day working there over the last year, and the average
pay is $32 an hour.”

Orr said he believes that any risks to the environment and safety are minimal at best.

Documents and emails between the Ohio EPA and processing-plant companies show that agency
officials keep a keen eye on construction schedules as they draft air-pollution permits.

One EPA memo described permits that Utica East Ohio Midstream requested for two plants in
Columbiana and Harrison counties as “hot permits” and listed desired dates for final decisions.

As the Hickory Bend plant was in the planning stage, Gorcheff and other residents asked to
review a draft of the permit and requested a public hearing to discuss it. They included a petition
with 51 signatures.

But the EPA seemed more concerned about NiSource’s timetable.

“We are going to need ... a better understanding concerning the problems it will cause the
company if we hold a public hearing,” Ohio EPA’s Hopkins emailed his staff on May 13. “Can you guys
find out what the company’s schedule is and what problem will be caused by the additional time a
hearing will take?”

Public hearings require officials to re-examine pollution limits and either change them or post
comments explaining why changes are unnecessary.

On May 14, Laurie Stevenson, the Ohio EPA’s deputy director for business relations, emailed an
EPA official in northeastern Ohio that Nally wanted the permit approved and was open to an “
information meeting” with residents. That meeting was held on May 22, two weeks before the EPA
approved the permit.

Permits for industrial operations that are deemed minor sources of air pollution often can be
handled relatively quickly. Ohio EPA records show that the agency approved permits for shale-gas
plants in two to six months.

Permits for major sources of pollution often require more-detailed and time-consuming analyses.
Ohio EPA spokeswoman Heidi Griesmer said the agency can produce a draft permit for a major source
in about eight months.

Even if the analyses are simple and completed in three months, the Ohio EPA must then post a
draft permit for public review and comment for at least 30 days. Once that public review is over,
the state must wait at least 40 days for the U.S. EPA to review the permit.

Objections by federal officials can take at least three months to file before they are hashed
out with state officials and companies. In some cases, requirements to answer public and federal
questions and objections can lengthen the permitting period by a year or more.

For example, the public and federal review of a draft permit for Architectural Fiberglass Inc.,
a Cleveland-based business that makes plastic composite parts, added months to the process, from
October 2011 to March 2012.

A plant is considered a major source of pollution if it emits at least 10 tons of any hazardous
compound in a year. It’s the same for plants that emit at least 100 tons of other regulated
pollutants a year, including compounds that help create smog.

Most Ohio shale-gas refineries had no trouble meeting minor-source limits on paper and avoiding
public and federal reviews. EPA documents show that the NiSource plant in Mahoning County would
emit less than half a ton of hazardous compounds annually and less than 10.18 tons of volatile
organic compounds.

In an interview before he resigned as Ohio EPA director on Jan. 7, Nally said the agency urged
shale-refinery companies to use electric motors in their plants instead of exhaust-producing gas or
natural-gas engines.

“It kept them as a minor source,” he said.

But most, if not all, of the plants are expected to expand as the number of shale wells and the
amount of raw shale gas grows.

NiSource announced plans on Jan. 6 to add two more processors that would triple Hickory Bend’s
natural-gas output. Utica East Ohio’s Kensington processing plant in Columbiana County is in the
middle of its second expansion. And a processing plant owned by MarkWest near Cadiz is expanding as
well.

That means air pollution will increase, too.

Nally said he expects that several plants eventually will be regulated as major sources of air
pollution.

“Obviously, as they continually modify their permit, at some point in time there will be a
tripper,” he said. “I don’t know what that number is exactly. Whether it’s the fourth or the eighth
(expansion), I’m not sure.”

Zamarin, NiSource’s chief operating officer, said the processing plants are safe and vital
to the growing shale-drilling industry.

“The gas that’s coming out of the ground in much of the Utica is wet gas that cannot be
delivered to the market” without processing, he said.

When a plant goes from a minor to a major source, the permit process starts over again. The
public is notified, and the U.S. EPA gets to review the permits.

Gorcheff said she fears that neighbors won’t be able to argue against further expansions.

“They are going to piecemeal it,” she said. “They start real small and keep adding and adding
and adding until it’s a (major source). And by that time, it’s already built.”

Other advocates say they fear that as more minor sources of air pollution are permitted, their
combined output will worsen overall air quality.

Ohio EPA records for Harrison County show that in addition to the MarkWest processing plant near
Cadiz, the agency approved 34 minor permits for Utica shale operations that include 25 shale-well
sites and two fractionator plants.

Just to the north, in Carroll County, Ohio EPA officials approved permits for 80 shale-well
sites and three compressor stations, which help push natural gas through pipelines.

“These are areas where folks are used to some nice air quality as compared to those of us living
in urban areas,” said Melanie Houston, the Ohio Environmental Council’s environmental-health
director. “There definitely will be health impacts, particularly for those living the closest to
these sites.”

Ed Hashbarger, a retired Mingo Junction police officer who leads a grassroots group called
Jefferson County Citizens for Environmental Truth, said the gas-processing industry used local and
state politicians’ hunger for new jobs to help bypass public review and protections.

“You know people are desperate, and you can play on these things,” Hashbarger said.

He said he fears pipeline explosions and other safety problems near people’s houses.

Hashbarger mentioned a Nov. 16, 2011, pipeline explosion in Morgan County that blew apart three
houses and a barn near Hooper Ridge. Federal officials concluded that pressure from a landslide
cracked a weld on the interstate pipeline, and the explosion caused $1.2 million in property
damage.

“This isn’t Oklahoma or Texas,” Hashbarger said. “There are people living in every nook and
cranny here.”

There have been problems with plants elsewhere. Caiman Energy’s Natrium processing plant near
New Martinsville, W.Va., was shut down after a fire on Sept. 21. Twenty-five people were evacuated
from 11 nearby houses while six fire departments worked to extinguish the blaze. A cause has yet to
be reported.

Industry officials say their plants are built on proven designs that ensure safety. But an
overall plant-safety record is hard to determine.

A 2010 Department of Energy report lists 493 natural-gas processing plants in the United States,
with most concentrated in Louisiana, Oklahoma and Texas. A 2006 report discussed their
vulnerability to hurricanes, including Katrina and Rita.

An Exxon processing plant near Kingsville, Texas, caught fire on Nov. 16 and has remained shut
down since then.

An explosion at an Esso natural-gas processing plant near Longford, Australia, in September 1998
killed two workers and seriously injured eight others. A parliamentary investigation, completed in
June 1999, said the explosion was triggered by gases leaking from a cracked heat exchanger.

Explosions and fires from pipelines are tracked by the federal Pipeline and Hazardous Material
Safety Administration. The agency’s statistics include the “gathering lines” that shuttle raw gas
from oil and gas wells to processing plants.

From 1993 through 2012, the agency reported 143 “significant incidents,” including fires,
explosions and gas leaks involving gathering lines across the United States. The incidents injured
11 people and caused $407.2 million in property damage.

Eighty-two of those incidents were linked to corrosion that weakened pipes over time. Improper
welds and equipment failures caused 21 incidents, and 16 were linked to earthquakes, floods and
storms. Agency data show that 90 incidents involved off-shore oil and gas gathering lines.

Buddy Daugherty, manager of NiSource’s Hickory Bend plant, said he has never managed a plant
that has so many environmental safeguards. “We have to monitor every connection, every part, every
valve stem,” he said.

Gorcheff said residents should have had more say before the plant was built.

“It’s absolutely maddening what they’re doing,” she said of state officials.